This is a tuff one for me, but YES, I fully believe that we should be providing diplomatic support to Taiwan. But let’s be clear and honest about our support... we have become the whore of the world by supporting any regime as long as it is economically friendly to us; we have pulled out of agreements, we have failed to defend our allies and we have verbally attacked our allies at every opportunity while at the same time winking at our adversaries. So the question for me is, how seriously would a diplomatic commitment by the Trump administration be and how seriously would it be viewed and taken? The Kurds sure thought that we were committed, until someone more important came along.
OK, we’re in a self- inflicted trade war trade war with China which has already significantly hurt both the US and China as well as the world economy. In this, I believe that the president will allow us to bleed for as long as possible before making a big announcement about a tremendous deal, conveniently close to election time while continuing to tear down the independence of the Federal Reserve as much as possible; Wall Street will be blissfully happy and Lindsey Graham will tell us that the pain of the trade war was a worthwhile and patriotic venture.
Will a diplomatic commitment to Taiwan anger China? Sure, but ultimately I feel that China has just as much to lose as the US. Let’s also be clear here, regardless of the administration’s crap explanations, tariffs do NOT get paid to the US Treasury; the American consumer ultimately pays the cost at purchase which is really the cost of American companies having been subsidized and incentivized for years with our tax dollars to move production to China, ostensibly to become more competitive (i.e. more profitable to investors do lobbying has of course played a big part).
The US remains in the front position only because our debt is still considered to be the safest in the world. And having ‘safe’ debt combined with the US dollar as the world currency places us firmly in the driver’s seat because it allows us an ability that other nations don’t possess - the ability to print more world currency - US dollars.
While on the surface it seems foolish to aggravate China even more at a time when an ill-planned trade war is going on, beware, if the US dollar falls out of favor, and there are moves world wide to make this a reality, Secretary Mnuchin can print and and print and print (and he and his trophy wife can do black leather glove photo ops with sheets of money) yet all it will do is take us further down the trap.
It’s true, China is the largest owner of US debt, owning about 5.3% of it. That’s about $1.2 trillion! But don’t be fooled; China is also very smart. For China, ‘long term’ means 30 or 50 years, while for the US, ‘long term’ is always short sighted, meaning until the next election. China is as tied to the value of US debt as the US is to tied to their continued buying of it.
Take the chance, stand for what’s right. Provide diplomatic support to Taiwan. But if we offer the support, we must be FULLY committed while knowing it may ruffle a few Chinese feathers along the way.